China has been one of the fastest growing retail markets over the last several years. It is currently forecasted to reach $5.291 trillion USD in 2019 and will continue its growth to surpass the US in size and reach $6.412 trillion USD by 2023. One prime example of the strength of this market was the recent record breaking Double 11 celebration on 11/11/19, otherwise known as “Singles’ Day.” An unofficial Chinese shopping holiday originally designed to attract bachelors, this year’s e-commerce sales came in at a whopping $38.4 billion USD by Alibaba in just 24 hours. In comparison, the combined total for Black Friday & Cyber Monday sales in the US was a mere $13.9 billion USD in 2018. Alternately, the sales numbers from Alibaba’s Singles’ Day 2019 equate to more than half of what Amazon brings in an entire quarter. Let that sink in.

Wanting to experience this impressive market for myself, I travelled to Qingdao, China in November to attend China Shop 2019 with hopes of catching a glimpse of China’s future in retail. The event markets itself as the largest professional retail exhibition in Asia with over 900 exhibitors and 65,000 visitors in attendance. Exhibitors from all parts of the industry value chain from intelligent information technology to retail lighting and displays to retailers of commercial cold chain were in attendance. Sharing their visions for the future, a few of the highlight companies in attendance included WeChat Pay, Hema, Panasonic, P&G, Aisino Wincor, Wintec and many more. Many attend this conference to learn about industry enterprises or best practices, to seek potential solution suppliers to benefit their businesses and customers, as well as, to expand business networks inside and outside China.

As I walked around the show, it was apparent that many of the technologies and innovations on display at the show were customer focused. Retailers have become aware that in order to attract and retain customers they must improve the overall customer experience. Exhibitors showed off everything from modern and sleek lighting and displays to fast touchscreen automated checkout solutions to even convenient smart locker solutions to pick up pre-ordered items for consumers. These were just a few of the many technologies on display. While taking in the sights and sounds of the show, I observed two recurring themes. One, most of these innovations are what I would define as “Near term solutions”. They are technologies that already can be found in a retail environment or will be found in it shortly. I did not see many that were extremely futuristic or jaw dropping. The second observation was that there were multiple suppliers touting similar looking solutions without any single solution standing out as particularly better than the other. This leaves a few questions lingering in my mind, have we hit an innovation development wall and is everyone just copying everyone else’s solutions?

Another major observation was the variety of payment solutions that were on display at the show. Many retailers were focusing on ease, efficiency and automation of the payment process for customers. Suppliers from POS systems to automated kiosks to even touch screen vending machines were available. Most of the Chinese manufacturers were focused on digital payment types and if you were a supplier who is not compatible with WeChat Pay or Alipay it was hard to attract any attention. This statement was affirmed by one attendee who told me “If product suppliers are not able to accept WeChat Pay or AliPay, retailers will not even give you a chance.” 

I briefly touched this earlier, but my final thoughts involve the vast variety of suppliers with similar solutions that were present at the expos. This point highlights that the retail industry is very crowded, and a lot of players are fighting for the same customers. And when this happens the price of products are usually the primary factor used to differentiate. The problem with this is that it drastically hurts suppliers in the industry. One automated checkout supplier told me that due to this extreme competition, margins have shrunk considerably for manufacturers over the last few years. This is forcing them to look to other markets outside of China like South America and Eastern Europe to try and sell their products. The only reason the US is not a target he stated was due to the trade war and high tariffs which make it not profitable to ship products there. 

Overall, while not overflowing with innovative ideas, the experience was enlightening. One interesting point to leave you with is that of all the payment kiosks on display I was not able to find any that accepted cash payments except for one that Glory had on display. This is interesting because even though China has drastically moved towards digital payments methods via QR codes, WeChat Pay and Alipay, the Global Cash Index report forecast cash usage to still grow by 9.2% by 2021 despite these new payment methods. Cash is far from gone in terms of usage in China, but manufacturers are starting to forget to support the customers that prefer to use this form of payment.

If you want to learn more about GLORY or the retail market in China contact Mike Jarmus or email us.